City A.M.’s panel of economists voted eight to one in favour of holding interest rates at their record low of 0.5 per cent this month.
Strong wage growth was viewed as a sign that inflation was likely to creep back up towards its two per cent target was likely later this year.
Inflation rose to 0.1 per cent in May after spending one month in negative territory.
Meanwhile, average pay was 2.7 per cent higher in the three months to April compared with the same period a year earlier.
Worries about the ongoing crisis Greece and the impact this could have on the UK also deterred some from voting.
The Bank of England will announce its decision at 12pm today. Rates have been at 0.5 per cent since March 2009.
CITY A.M.’S SHADOW MONETARY POLICY COMMITTEE
OUR PANEL’S GUEST CHAIR FOR THIS MONTH: ALAN CLARKE | SCOTIA BANK
Hold rates. While the economic data have been stronger where it matters (wages, consumer sentiment, services sentiment), financial market data imply a dampener on inflation. There is also an added layer of uncertainty this month with regards to the likely impact that the latest Budget measures will have on the economic outlook.
ANDREW GOODWIN OXFORD ECONOMICS
Hold rates. We are far from the point at which rising wages could cause an inflation problem. And the escalation of the situation in Greece adds to the case for a cautious approach.
GEORGE BUCKLEY DEUTSCHE BANK
Hold rates. Despite the economy continuing to grow, low rates of inflation and the ongoing saga in Greece suggest against the need for an early rise. It may not be until next spring until rates are raised.
HOLGER SCHMEIDING BERENBERG BANK
Hold rates. The upward revision of real GDP data and the firming labour market strengthen the case for a rate hike in late 2015 or early 2016. But amid the escalating Greek crisis, the BoE should just continue to wait and see for now.
VICKY REDWOOD CAPITAL ECONOMICS
Hold rates. Although wage growth is accelerating, there are tentative signs that productivity growth is picking up too. The MPC should also hold fire while there is still so much uncertainty in the Eurozone.
SIMON WARD HENDERSON
Raise. Growth is solid. Wages are picking up stronger than the MPC expected, suggesting that labour market slack has been exhausted. The Budget loosened the fiscal stance and the big rise in the minimum wage may put pressure on earnings.
VICKY PRYCE BIS AND CEBR ADVISER
Hold rates. Weak manufacturing and exports suggest the recovery is still fragile and will be further inhibited by public sector budget cuts and the impact of the continuing Greek crisis on Eurozone growth.
TREVOR WILLIAMS LLOYDS BANK
Hold rates. The UK economy is on track for another solid year of growth, but inflation remains well below the two per cent target at only 0.1 per cent in the 12 months to May.
ROSS WALKER RBS
Hold rates. Wage inflation has picked up a little more than expected, but sterling’s appreciation continues and it is far from clear that the economy will sustain above-trend growth this year.